Sports Direct buys £40m private jet as profits dive

Sports Direct’s controversial founder and chief executive Mike Ashley surprised the City again today with a £40 million splurge on a corporate jet despite a plunge in profits and its share price this year.

Sports Direct said the aircraft, costing $51.1 million (£40.3 million), will “generate substantial operational benefits”.

It joins other assets including the helicopter Ashley uses to commute to the retailer’s Derbyshire headquarters.

The purchase was revealed in Sports Direct’s half-year update, which showed a 57% dive in underlying pre-tax profit to £71.6 million. Group revenue rose 4.2% stripping out currency effects.

The result follows a torrid year in which Sports Direct has faced heavy criticism over its working practices and governance and been hit by the pound’s Brexit-induced slide.

Sports Direct did not hedge its currency exposure prior to the EU referendum.

Its shares, down 43% already this year, dropped another 24.4p, or nearly 8%, to 290.8p today after a share buyback scheme was put on hold.

Broker Peel Hunt said the profit margin, down 610 basis points to 40.2% in the UK, will fall by a similar amount in the second half without a sterling rebound, and cut its forecasts for the next three years.

However, it praised Ashley for a “decent statement of intent”. The billionaire, who also owns Newcastle United, wants to bolster relationships with brands like Nike and Adidas and is investing £300 million in property to achieve its ambition of becoming the “Selfridges of sport retail”.

Other plans include “a more tailored approach” in its struggling European business.

Sports Direct has also entered into an agreement with Double Take, a company directed by Ashley’s daughter Matilda, taking exclusive rights of its cosmetic brand SPORT FX, despite earlier questions over the appointment of the boyfriend of Ashley’s daughter Anna as a property consultant and use of a firm owned by his brother for delivery.

Chairman Keith Hellawell pledged to restore morale after an “extreme political, union and media campaign” against the firm.